The Indian Rupee Strengthens Amid Positive PMI Data and Weaker USD
- The Indian Rupee gains momentum in Monday’s Asian session.
- HSBC Manufacturing PMI in India rises to 57.5 in October, surpassing expectations.
- Weaker USD due to US election uncertainty supports the INR.
The Indian Rupee (INR) shows resilience on Monday as the US Dollar (USD) weakens ahead of the upcoming US presidential election. Despite sustained foreign outflows and rising crude oil prices, the INR continues to strengthen. The recent data release indicates a positive trend in the Indian economy, contributing to the INR’s upward movement.
Key Market Insights: Indian Rupee’s Outlook and Factors Influencing its Movement
- RBI’s intervention in the foreign exchange market to stabilize the INR.
- Impact of US Nonfarm Payrolls (NFP) on USD/INR exchange rate.
- Market expectations surrounding the US presidential election outcome.
The Reserve Bank of India (RBI) plays a crucial role in managing the INR’s stability by utilizing its FX reserves. Analysts predict a range-bound trading scenario for the INR against the USD in the coming year. The US NFP data, released recently, indicates a weaker than expected job growth, influencing the USD’s performance. Market sentiments regarding the US election outcome also impact the currency markets.
Technical Analysis: USD/INR Pair’s Long-Term Outlook
Despite the current weakness in the Indian Rupee, the USD/INR pair remains bullish, supported by key technical indicators. The price is above the 100-day Exponential Moving Average (EMA), indicating a positive trend. The Relative Strength Index (RSI) further confirms the upward momentum.
Upside resistance levels for the USD/INR pair are identified, with potential targets at 84.24, 84.50, and 85.00. On the downside, a break below 84.05 could lead to support levels at 83.78 and the 100-day EMA.
Factors Affecting the Indian Rupee’s Performance
Higher inflation rates in India compared to global peers can impact the INR’s value. While inflation can lead to currency devaluation through oversupply, it also influences export costs. The RBI’s interest rate decisions in response to inflation levels can attract international investors, affecting the demand for the Rupee.